Is the described transaction between the capital owner and his operator—in which the percentage of profits is not disclosed, and varying amounts are given with the capital owner's knowledge and consent that the capital operator earns more—permissible, and what is required to rectify it?
The mentioned transaction, which involves giving money for work without specifying the profit share for each party, is incorrect and Islamically invalid. This is because a contract requires that the share of profit for each of the contracting parties be known, and its ignorance invalidates the contract.
Ibn Qudamah said: "A Mudarabah is not valid unless it is based on a known amount."
If the Mudarabah is invalidated, the majority view is that all the profit belongs to the owner of the capital, and the worker is entitled to a fair wage (Ajr al-Mithl) for his work, to be determined by experts. To rectify the transaction, a new contract must be drawn up, specifying a known percentage of the profit agreed upon by both parties.
Summary from Ftawy's records · added here
Reviewed by El Fatwa's sharia committee.
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- Summary from Ftawy's records, reviewed by El Fatwa's sharia committee.
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